A distressed property is a term that refers to homes that are short sold, foreclosed, or generally those that are real estate owned.
Specifically, foreclosure refers to homes whose owner has defaulted on their loan and the bank ultimately took possession of the property. A short sale on the other hand is the kind of option a home owner has if he/she is facing foreclosure. Instead of foreclosing the home, the owner may go for a short sale and sell their home for less than the amount that they owe. Real estate owned properties on the other hand are houses that have been foreclosed and are currently owned by banks. You can buy these homes at a lower price since lenders could face higher costs if they maintain real estate owned properties.
Buying Distressed Properties
Buying a house that are in one of the abovementioned condition means that you are gonna have to transact with a financial institution instead of a private seller, so the deal may take longer than it would with a regular seller. Delays could be expected when waiting for an offer and a closing date.
It should be understood that distressed properties may have more maintenance and repair issues than most homes being sold. So if you are patient and willing to risk, distressed properties also have its pros and this includes a lower buying price. Many distressed property buyers see an increase in their property value within a short period of time, after repairs and staging have been made.
But as a whole, keep in mind that any purchase should be thoroughly thought about before done because not all transactions are the same and not all distressed homes have the same traits. Some properties are better than the others and some properties may be harder to have their values increased as well.
